Distributed Solar PV Beats Grid Prices with “Balance of System” Cost Reductions

Date: 14 Mar 2011 | posted in: Energy, Energy Self Reliant States | 2 Facebooktwitterredditmail

Cutting non-module solar PV costs with best design practices could make solar PV cost less than grid electricity for more than 25 percent of Americans. Half of the installed cost of a solar PV array is the solar module, but the other half (the “balance of system”) involves labor, assembly, and other components.  With module prices … Read More

High Penetration of PV No Issue for Kauian Grid

Date: 10 Mar 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

As long as the penetration of PV on the grid is low, the utility should have no trouble maintaining power quality as the output from PV systems fluctuate. However, even if overall PV penetration levels in a region are low, it is possible to have local “hot spots” where penetration on a single distribution circuit is very high. In this case utilities have concerns that power quality will suffer on that distribution circuit due to the high penetration of PV. [Kauai Island Utility Cooperative] KIUC is testing that hypothesis to the extreme with its 1.2 MW solar farm, by supplying 100% of a distribution circuit with PV during the day. [emphasis added]

Now for the good news: as the utility monitors the distribution circuit on sunny days and cloudy days, with the PV system turned on and the PV system turned off, they are seeing very little difference in the voltage levels, harmonics, and overall power quality between the different scenarios. These preliminary results suggest that utilities could go to very high levels of PV penetration in localized areas without causing problems for the grid. KIUC is continuing to monitor the system, but the initial results look very positive for the PV industry. [emphasis added]

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U.S Grid Can Handle Lots of Solar PV with Low Integration Costs

Date: 10 Mar 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

A state such as New York should be capable of absorbing and benefiting from well over 7 GW of high- value PV without having to incur significant integration costs beyond the cost of PV itself, further noting that the storage sizes involved could well be met with a smart deployment of interactive plug-in transportation...the low-cost penetration potential is large enough to allow for the development of a considerable localized, high-value PV generation market worth 100’s of GW in the US.

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Distributed Solar and Grid Parity

Date: 8 Mar 2011 | posted in: Energy, Energy Self Reliant States | 1 Facebooktwitterredditmail

Grid parity is an approaching target for distributed solar power, and can be helped along with smarter electricity pricing policy.

Consider a residential solar PV system installed in Los Angeles.  A local buying group negotiated a price of $4.78 per Watt for the solar modules and installation, a price that averages out to 23.1 cents per kilowatt-hour over the 25 year life of the system.*  With the federal tax credit, that cost drops to 17.9 cents.   Since the average electricity price in Los Angeles is 11.5 cents (according to NREL’s PV Watts v2), solar doesn’t compete. 

Or does it? 

In Los Angeles, there are three sets of electricity prices.  From October to May, all pricing plans have a flat rate per kWh and total consumption.  During peak season (June to September), however, the utility offers two different pricing plans: time-of use pricing and tiered pricing.   Time-of-use pricing offers lower rates – 10.8 cents – during late evening and early morning hours, but costs as much as 22 cents per kWh during peak hours.  Prices fluctuate by the hour.  Tiered pricing offers the same, flat rate at any hour of the day, but as total consumption increases the rate does as well.  For monthly consumption of 350 kWh or less, the price is 13.2 cents.  From 350 to 1,050 kWh, the price is 14.7 cents.  Above 1,050 kWh, each unit of electricity costs 18.1 cents.

The following chart illustrates the difficulty in determining whether solar has reached “grid parity” (e.g. the same price as electricity from the grid).  For some marginal prices, solar PV is cheaper than grid electricity when coupled with the federal tax credit.

Over the course of the year, solar is not less than grid electricity.  A very rough calculation of the expected time of day production of a solar array in Los Angeles finds that the average value of a solar-produced kWh is 15.1 cents over a year.  That suggests that solar power is not yet at grid parity, even with time-of-use pricing.

There are other considerations, as well. 

For one, we ignored additional incentives for solar power, including federal accelerated depreciation (for commercially-owned systems) as well as state and utility incentive programs.  These programs substitute taxpayer dollars for ratepayer ones, making the cost of solar to the grid lower.

We also didn’t confront the complicated issues involving a grid connected solar PV system.  Net metering is the rule that governs on-site power generation and it allows self-generators to roll their electricity meter backward as they generate electricity, but there are limits.  Users typically only get a credit for the energy charges on their bill, and not for fixed charges utilities apply to recover the costs of grid maintenance (and associated taxes and fees).   Producing more than is consumed on-site can mean giving free electrons to the utility company.  So even if a solar array could produce all the electricity consumed on-site, the billing arrangement would not allow the customer to zero out their electricity bill.

Where Can Distributed Solar Compete?
Based on our own analysis, solar PV at $5 per Watt (with solely the federal tax credit) could not match average grid electricity prices in any of the sixteen largest metropolitan areas in the United States.  With accelerated depreciation – an incentive only available to commercial operations – solar PV in San Francisco and Los Angeles (representing 21 million Americans) could compete with average grid prices near $4 per Watt installed cost. 

Under a time-of-use pricing plan (where prices could be 30% higher during solar hours, as in Los Angeles), 40 million Americans would live in regions where solar PV could compete with grid prices at $5 per Watt with both federal incentives.

With solar at $4 per Watt, Californians would only need the tax credit (not depreciation) for grid parity with time-of-use rates.  Adding in the depreciation bonus would increase the number to over 62 million Americans.

Distributed solar is nearing a cost-effectiveness threshold, when it will suddenly become an economic opportunity for millions of Americans.

*Note: for regular readers, we changed and improved our levelized price model (in response to some comments on our cross-post to Renewable Energy World). 

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Every Utility Should Have This Map

Date: 2 Mar 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

To support its solar PV program, Southern California Edison rolled out a map of its grid system, highlighting (in red) areas that “could potentially minimize your costs of interconnection to the SCE system.” A similar map is forthcoming from San Diego Gas & Electric and Pacific Gas & Electric. The benefits for distributed generation are obvious, … Read More

Electricity Deregulation Burns Ratepayers, Again

Date: 14 Feb 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

A new report about electric grid deregulation in Texas shows (yet again) that deregulation of electricity leads to much higher ratepayer costs:

In 2009, the report found 93 percent of Texans served by deregulated electric companies were charged above the national average. By comparison, 81 percent of customers outside deregulation paid less.

A 2007 story in USA Today examined state electricity deregulation policies and also found that they hadn’t ended well for ratepayers:

While average prices rose 21% in regulated states from 2002 to 2006, they leapt 36% in deregulated states where rate caps expired, according to a study by Ken Rose, senior fellow at the Institute of Public Utilities at Michigan State University.

Texas apparently didn’t learn the lesson from its hometown team and deregulation poster boy – Enron – which manipulated California’s deregulated market to precipitate the 2000-01 California electricity crisis.

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EV Charging Station Charges Cars and Supports the Grid

Date: 24 Jan 2011 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

The batteries and the solar cells themselves are something like shock absorbers for the grid. If drivers want to charge up their cars during peak periods on the grid, the charging station’s batteries will meet part of that demand so that the impact on the grid is milder. Likewise, the solar cells will chip in with some energy, lessening the load on the grid.

“If with new technologies we can control these resources on the distribution side, we can eliminate the need for potentially very expensive upgrades to the distribution system,” said James A. Ellis, the senior manager for transportation and infrastructure at the T.V.A.’s Technology Innovation Organization.

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Largest Parts of the Electric Grid are the Most Vulnerable

Date: 1 Nov 2010 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

A recent study in the journal Safety Science suggested that the most vulnerable parts of the grid were the smallest, like neighborhood substations. 

“That’s a bunch of hooey,” says Seth Blumsack, Hines’s colleague at Penn State.

Hines and Blumsack’s recent study, published in the journal Chaos on Sept. 28, found just the opposite. Drawing on real-world data from the Eastern U.S. power grid and accounting for the two most important laws of physics governing the flow of electricity, they show that “the most vulnerable locations are the ones that have most flow through them,” Hines says. Think highly connected transformers and major power-generating stations. Score one point for common sense.

And score one point for distributed generation. 

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